The Federal Reserve ran an operating loss of $114.3 billion last year, its largest ever, a consequence of its campaign to aggressively support the economy in 2020 and 2021, then jacking up interest rates to combat high inflation.
The losses added to already large federal deficits that have required bigger auctions of Treasury debt. The central bank’s losses could continue for as long as short-term interest rates remain near current levels. That has the potential to fuel new political attacks on the Fed, though there have been no signs of that so far.
The U.S. central bank announced preliminary, unaudited results of its 2023 financial statements on Friday.
The central bank paid more to financial institutions on interest-bearing deposits and securities than it earned from securities that it bought when interest rates were lower. That’s a result of it raising its benchmark short-term interest rate to a two-decade high, above 5%, last year.
www.wsj.com/economy/central-bank…malertNEWS
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